India’s ‘Look East’ Policy Pays off

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Indian Prime MinisterAtal Bihari Vajpayee‘s Southeast Asian tour this week to participate in the Association of Southeast Asia Nations (ASEAN) summit in Bali, Indonesia marks the success of a decade-long shift in Indian foreign policy – known as the “Look East” strategy – initiated by former Prime Minister Narasimha Rao in the early 1990s. The political consensus that had then emerged, partly as a response to the end of Cold War, to liberalize the economy and participate in the new trend of globalization, is apparently continuing to win India new business partners and friends in its continuing war against militancy in the Indian state of Jammu and Kashmir.

Two broad agreements, for comprehensive economic cooperation and combating terrorism, have been signed. India has also consented to the ASEAN Treaty of Amity and Cooperation. Vajpayee went a step further to offer a unilateral “open skies” policy to specified Southeast Asian airlines, which will be free to operate daily flights to the Indian metropolitan centers, outside any bilateral aviation pact. Laying stress on better connectivity between India and ASEAN, Vajpayee said, “We could see how close we can get with an open skies arrangement.” In this context he announced India’s unilateral decision to connect all 10 ASEAN capitals with four metropolises in India through daily flights without further bilateral discussions.

Apart from laying emphasis on the need for road links between the geographically contiguous India and ASEAN countries, Vajpayee also suggested the holding of an India-ASEAN motor rally. The framework agreement spells out a program for free trade agreements in goods, services, investment, areas of economic cooperation and an early harvest program. Negotiations on free trade agreements in goods will take due account of the economic sensitivities of the less developed economies of Cambodia, Laos, Myanmar, Vietnam and the Philippines.

And on Thursday, India and Thailand signed five agreements covering a wide range of issues, including a landmark free trade agreement following a one-to-one meeting between Vajpayee and Thai premier Thaksin Shinawatra in Bangkok. The agreement will allow for free trade on all goods by 2010. The two countries will also slash tariffs by 50 percent on 84 products under an early harvest scheme to go into effect March 1 of next year. In addition, ways to combat terrorism and intelligence sharing were also discussed, with India offering to sell defense equipment to Thailand.

Taken together, these steps promise considerable improvement in economic and political cooperation between India and its Southeast Asian neighbors – extending from Myanmar to the Philippines. India is glad to have been present, thanks to its ASEAN associate membership, when the members agreed to create the eastern equivalent of the European Union in two decades. The Bali Concord II envisions a single Southeast Asian market, covering 500 million people and with annual trade that already touches US$720 billion. The concord calls for the creation of an ASEAN Economic Community modeled on the EU by 2020. If ASEAN evolves a free trade arrangement with China on similar terms – the abolition of all tariffs and trade barriers – the result will be the world’s largest free trade zone.

India has already been able to take a small step towards taking advantage of this historic development. The early harvest program New Delhi has signed with ASEAN lays out a timetable for mutual trade concessions up to 2007. Skeptical Indian observers are hoping that it will lead to an across-the-board lowering of trade barriers, despite India’s traditional reluctance in giving such concessions, and that the story of so-called free trade agreements with Sri Lanka and Singapore will not be repeated. In the case of Sri Lanka, India placed curbs on tea, textiles and rubber – the very items Sri Lanka could sell in the Indian market. As for Singapore, more than two years after agreeing to work out a free trade treaty, it has just been announced that the city-state will only now “study” the issue.

The slow pace of economic reforms and lack of better integration of its foreign and trade policies has made many analysts skeptical whether India will be able to effectively sustain its “Look East” policy, despite all the hype associated with the prime minister’s annual trips to the region. External Affairs minister Yashwant Sinha is, however, adamant that India has embarked on the second phase of its “Look East” strategy. In a speech at Harvard University last month, Sinha pointed to a remarkable transformation in India’s attitude towards Asia: “In the past, India’s engagement with much of Asia, including Southeast and East Asia, was built on an idealistic conception of Asian brotherhood, based on shared experiences of colonialism and of cultural ties. The rhythm of the region today is determined, however, as much by trade, investment and production as by history and culture. That is what motivates our decade-old ‘Look East’ policy. Already, this region accounts for 45 percent of our external trade.”

Vajpayee’s address at the ASEAN business summit struck the right chord by focusing on the country’s areas of strengths and inviting ASEAN investors to take a fresh look at “India of the 21st Century … [a] country on the move.” He has set an ambitious target for India-ASEAN trade: it is to grow from $12.5 billion now to $30 billion in 2007. Addressing the meet on Tuesday, Vajpayee, seeking to partner ASEAN in the era of globalization, listed six strong points of the Indian economy, including a rich pool of English-speaking people, as well as the information technology revolution for enhancing India-ASEAN trade and investment.

The prime minister said, “India is conscious of the new ASEAN members. We are offering unilateral tariff concessions on items of export interest to Cambodia, Laos, Myanmar and Vietnam [lesser developed and newer entrants to ASEAN]. We are also seeking to incorporate an early harvest scheme to provide the incentive for a long-term engagement. If we proceed along this course, we can target a trade turnover of US$30 billion by 2007 and a free trade area within 10 years.” Observing that India’s trade and economic interaction with the ASEAN countries has been growing steadily, but not fast enough, Vajpayee said trade of less than $10 billion between the two did not do justice to the combined population of 1.5 billion people, producing $1.5 trillion worth of goods and services annually. Recalling his speech at the first India-ASEAN business summit a year ago for boosting business, he said, “Our trade has since grown by about 25 percent, but my comments remain valid.”

The business summit was also addressed by Chinese and Japanese Prime Ministers Wen Jiabao and Junichiro Koizumi and South Korean President Roh Moo-hyun. The powerful ASEAN comprises Indonesia, its current chairman, Singapore, the Philippines, Malaysia, Thailand, Cambodia, Laos, Vietnam and Myanmar and Brunei. Vajpayee said in spite of the recent stalemate at the Cancun World Trade Organization (WTO) Ministerial Conference, a rule-based and fair multilateral trading system should remain the goal. “But while we search for this ideal, regional trading arrangements offer immediate advantages, particularly for geographical contiguous regions. They can provide our domestic industry and agriculture with a valuable learning period, before being exposed to the far greater competition of global free trade,” he said.

Observing that non-Asians viewed Asia as the principal market of the future, the prime minister said it would emerge as a manufacturing hub and a global provider of services. “Asian countries should work towards strengthening their mutual synergies, so that they are strategically placed to derive maximum benefit from the emerging opportunities. The India-ASEAN partnership should energize this process to move us closer to our shared goal of making this truly the Asian century,” Vajpayee said.

Of special significance for India was the agreement to fight terrorism cooperatively. It has been facilitated by the fact that several ASEAN countries are facing the threat of terrorism. The Philippines, Indonesia and even Singapore have felt the impact of international terrorism. The Jemmah Islamiyah outfit is active in Indonesia, the Philippines, Singapore and Malaysia. Indonesia in the past year has witnessed two major terror attacks in Bali and Jakarta. The ASEAN countries have, therefore, become serious about dealing with terrorism and related crimes like money laundering and drug trafficking. They are looking to India for support to meet the challenges on this front. The ASEAN Regional Forum will remain the platform for a security dialogue in the region and it includes the US and the European Union. The declaration adopted at Bali provides for cooperation on information exchange, legal matters, and enforcement matters apart from institution building and training.

Speaking on the subject in an address to the Institute of Diplomatic and Foreign Relations in Kuala Lumpur on May 16, 2001, Vajpayee had articulated his vision of a new Southeast Asian security structure and India’s role in it. “We are conscious of the striving for a new security structure in the world, moving away from obsolete Cold War constructs,” said Vajpayee. “We are engaged in a process of dialogue and consultation with our friends and partners to help shape a new security environment free of confrontation and tension. Our security dialogue with ASEAN can also include this theme. The nature of the global village has made it necessary to tackle even non-military issues of security in a comprehensive manner. Our region lies along side sea lanes of great strategic importance, which need to be protected. Poverty and shortages of food and energy threaten the stability of societies. Population growth and the spread of diseases like AIDS and TB are factors of deep concern. Environmental degradation and cyber crime are relatively newer concerns.

“There can be no effective solution to these problems within national boundaries. They have to be tackled through a cooperative approach, holistically and regionally. The security dialogue between India and ASEAN is, therefore, of utmost importance. Threats like religious extremism, drug trafficking, money laundering and terrorism have cast a dark shadow over our region. India has been a victim of state-sponsored and cross-border terrorism seeking to redraw national boundaries. Such violence in the name of holy war is a grave menace especially to pluralistic societies and endangers a peaceful and civilized global order.”

India’s growing relations with the countries belonging to ASEAN and the BIMSTEC forum comprising Bangladesh, India, Myanmar Sri Lanka and Thailand is beginning to free it from the straitjacket imposed by the South Asian Association of Regional Cooperation (SAARC). The latter is now largely moribund due to a standoff between India and Pakistan.

Incidentally, India is not alone in its desire to run away from South Asia. While India has been looking east in its desire to get away from its geographical location, Pakistan has been looking west since even before India initiated its “Look East” policy. It has also been seeking to enter into ASEAN. While Indian efforts appear to be meeting with success, however, the same cannot be said about Pakistan. India-Pakistan animosity has created irritations for ASEAN as well. But its spill-over effects in India-ASEAN relations have been contained. Though some of Pakistan’s friends in ASEAN have been trying to upgrade its status, perhaps in the name of Muslim solidarity, India and its friends have managed to keep it out. ASEAN is obviously trying to avoid becoming another arena for the two South Asian neighbors obsessed with each other to vent their hostility, make wild accusations and create ever-new controversies.

It seems that at last India’s “Look East” policy has started paying dividends. ASEAN and India appear to have developed a clearer vision of the future of their relationship. They have set realistic targets for development of trade and investment at the Bali summit. Southeast Asian leaders have also identified areas of cooperation and collaboration on global issues, including those related to the future of the United Nations. ASEAN has also been trying to balance its trade and overall ties between its two giant neighbors – China and India.

Things have been moving forward for India since 1997, when it began its formal interaction with ASEAN as a full dialogue partner. It is up to New Delhi to maintain the momentum this relationship has been developing. ASEAN will naturally look for concrete follow-up measures on the agreements signed. The negotiations for a free trade agreement will begin in January 2004, on goods, and take up services in 2005 so that the whole framework is in place by 2007. India is committed to lowering its peak tariffs to East Asian levels by 2005. India cannot afford to be niggardly about tariff concessions, if it doesn’t want the new ASEAN to automatically gravitate towards China. Meeting goals being set now will be the test of the relationship and its measure of success. Taking stock of the substantive agenda spelt out at the first India-ASEAN summit in Cambodia last November, Vajpayee admitted that there have been doubts about the pace of implementation of certain proposals, but in his view progress has nevertheless been much more rapid than anticipated. As a mark of this forward movement, the India-ASEAN Vision 2020 would be adopted at the third summit in Laos next year.

Vajpayee has spoken of his vision of a future where ASEAN countries and India would stand together as a single economic community. The implementation of this idea, he said, would depend on the comfort level of member countries. But if this vision is to be realized, India will have to be more pro-active than it has been so far. Experts believe that a united ASEAN will be both an export market and an economic rival to India. India has no reason to drag its heels on trade agreements as is its wont. It normally keeps looking for strategic incentives to make up its mind. According to one expert it should be incentive enough for India that ASEAN plus China will be Asia’s largest economic zone and Asia’s fulcrum for decades.

Not everybody in India is, however, enthused by Vajpayee and Sinha’s exertions in bringing India close to ASEAN, or their rhetoric about making the 21st an Asian century. In a scathing editorial view, India’s largest circulated newspaper, The Times of India, wrote on Wednesday: “New Delhi’s record in any regional or international arrangement is dismal, and driven by its obsession with Pakistan. As the big boy in the South Asian bloc, India could have played a key role. Instead it has held SAARC hostage to its problems with Pakistan. In the Commonwealth, too, New Delhi’s sole concern is how to target Pakistan by isolating it from the international community. Again, at the recent UN General Assembly session, New Delhi’s exertions were solely with reference to Pakistan.

“While no one would deny that Pakistan is waging a proxy war against India through terrorism, to be a prisoner of this in diplomacy makes New Delhi seem as if it has no other item on its agenda. This time, too, terrorism is high on the prime minister’s agenda. And, even as he was setting out for Bali, Mr. Vajpayee could not restrain himself from speaking, at some length, of Pakistan’s terrorist training camps. Unless Indian diplomacy can extricate itself from this trap, it is unlikely to succeed in its pursuit of a larger, global vision.”

But, paradoxically, Indian foreign policy successes are gaining a growing number of admirers in Pakistan. Shireen M Mazari, a respected strategic affairs analyst and director general, Institute of Strategic Studies, Islamabad, commented in a recent write-up in The News: “Pakistan should be prepared to see India pushing its way into the Organization of Islamic Countries. Already, India is expanding its influence in the Gulf and has become a full dialogue partner in the Gulf Cooperation Council, alongside the US and Japan. And India is already active in Afghanistan, Central Asia and increasingly in Iran also. In Southeast Asia, India is increasing its interaction with ASEAN while ensuring that Pakistan is kept out.

“Indian pro-activism is in sharp contrast to Pakistan, which continues to focus almost solely on the US. Opportunities in the neighborhood go unnoticed or ignored as we look to keep the US appeased even as its officials launch into diatribes against Pakistan – retracting some of them much later when the damage has already been done, or when they finally feel that Pakistan has had enough and will not tolerate more abuse. Even at the micro level, individual Pakistanis continue to be harassed and abused by US officials, with no reciprocity in such treatment being meted out to Americans visiting Pakistan.”

Clearly, Vajpayee will feel as much at home in Islamabad as he did in Bali when or perhaps one should still say if, he goes to Islamabad next January to attend a SAARC summit conference. His pro-active and successful foreign policy has no dearth of admirers in the enemy camp. The momentum built up at the ASEAN summit will, however, have to be kept up for a real transformation of Indian relationship with its Southeast Asian neighbors.

*The article is written by Sultan Shahin

*The article was published October 11, 2003

(Courtesy: Asia Times)

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